Good day all. The Saga of Short Squeeze of the hedge funds continues, and Robinhood has restarted trading of Gamestop and other companies they stopped yesterday. I wrote a blog post regarding what I knew, (Not much, but a general overview), and in it I mentioned that the New York AG was looking into things.
Well, it looks like she is really serious, for once and is actually investigating something she should actually investigate. Here are the details from Fox Business:
New York Attorney General Letitia James announced she is looking into recent activity on Robinhood after the trading platform restricted trading of certain securities Thursday, resulting in multiple lawsuits against the company.
“We are aware of concerns raised regarding activity on the Robinhood app, including trading related to the GameStop stock,” James said in a statement. “We are reviewing this matter.”
Robinhood and other trading platforms announced Thursday that they were restricting trading for a handful of securities that have exploded in value this week, including GameStop, AMC, BlackBerry, Tootsie Roll, Trivago, and others.
It appears, although this is just supposition, that the Hedge funds, which had lost billions over the short squeeze triggered by the Wall Street Bets Reddit group, told Robinhood to block any buy trades for the companies they were trying to short. This had the effect of driving the price of the shares down.
Shares of GameStop fell 44% Thursday after gaining nearly 800% earlier in the week. AMC similarly dropped 56% after skyrocketing in recent days.
This directly affected the day traders and small investors that were involved in the short squeeze of the hedge funds, and obviously, they were rather angry about it.
Day traders were incensed that they were cut off from buying these securities and only given the option to close out their positions.
Because of this, and the appearance that the shut down was at the behest of the Wall Street Hedge fund managers, the lawsuits have started flying.
A lawsuit was filed by one Robinhood user in the Southern District of New York accused Robinhood of “purposefully, willfully, and knowingly” removing GameStop from its platform, thereby depriving retail investors “of the ability to invest in the open-market.” Another lawsuit filed in the Northern District Court of Illinois accused Robinhood of manipulating the market.
And now the Attorney General of New York, a partisan witch hunter if there ever was one, is now setting her sights on Robinhood, and more then likely, the hedge funds. It isn’t just her, it’s also congress. This event and the apparent favoritism towards the hedge funds has crossed the aisle in Congress. You have Senator Ted Cruz and Alexandria Occasional-Cortex both wanting to know what is going on. (Although AOC is pulling back from any possibility of reaching across the aisle, accusing Senator Cruz of trying to murder her)
“We now need to know more about [Robinhood’s] decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” Congresswoman Alexandria Ocasio-Cortez, D-N.Y., tweeted Thursday.
Sen. Ted Cruz, R-Texas, told reporters Thursday that he wants to see “some transparency” from Robinhood, saying that their actions seem to favor a handful of “rich influential players at the expense of ordinary citizens and ordinary traders.”
It’s going to take a while for things to shake out, but I don’t think it’s going to end well for Robinhood. They’re going to get an anal probe that Aliens from outer space wish they could perform. Sit back ladies and gentlemen, we’re in for a very bumpy ride!
Thatisall
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